"We are dealing with the most important piece of EU legislation
apart from the Constitution," said Rapporteur Evelyne Gebhardt in
the debate preceding the vote. "Services in Europe must be as free
and open as goods and capital.”
The draft Directive on Services in the Internal Market, put
forward by the Commission in January 2004, is designed to cut the
red tape that currently prevents businesses from offering their
services across borders, or from opening premises in other Member
States.
But plans to cover the majority of all services provided to
consumers and businesses were dashed after MEPs reached a
compromise on the wording of the draft. Instead the scope of the
Directive will be limited to:
- Services of general economic interest such as postal services,
water supply, electricity, waste treatment.
- Business services such as management consultancy, certification
and testing, facilities management (including office maintenance
and security), advertising, recruitment services and the services
of commercial agents.
- Services provided both to businesses and to consumers,
including real estate services such as estate agencies,
construction (including the services of architects), distributive
trades, the organisation of trade fairs, car rental, and travel
agencies.
- Consumer services such as tourism, leisure services, sports
centres and amusement parks.
The draft Directive will not cover public or private healthcare,
services that are already covered by specific EU law – such as
financial services, telecommunications and transport – services of
economic interest and legal services, health care, audiovisual
services, gambling and lotteries, and professions and activities
linked to the exercise of public authority (e.g. notaries) and tax
services.
Country of origin principle
This requirement was too much for some Member States, who feared
that service providers from the newer Member States would be able
to undermine those established in older States, where requirements
can be much more rigorous. French, German and Austrian fears of the
‘Polish plumber’ undercutting the rates of his home-grown rivals
led to protests and, reportedly, contributed to the French ‘No’
vote on the EU Constitution.
Instead, MEPs have adopted a "freedom to provide services"
provision.
This, according to the European Parliament, requires that Member
States respect the right of the service provider to supply services
and guarantee the provider "free access to and free exercise of a
service activity within its territory". This guarantee is
underpinned by a ban on a number of obstacles to the free movement
of services, such as a requirement to register with a professional
body, or to open an office.
The amended text then stipulates grounds that would allow Member
States to limit this freedom through national rules. These grounds
are public policy, public security, environmental protection and
public health.
Member States will also continue to apply their own rules on
conditions of employment, including those laid down through
collective bargaining agreements.
Nevertheless, the requirements imposed on cross-border service
providers by the Member States using the above justifications must
still comply with the principles of the Treaty: non-discrimination
(for example on grounds of nationality), necessity (public policy,
public security or protection of health or the environment) and
proportionality (the requirements must be appropriate for achieving
the objective).
Other amendments made by MEPs include an expansion of the list
of reasons allowing Member States to restrict the freedom of a
service provider from another Member State to provide services on
their territory. The text also clearly says that the Directive does
not affect employment law in the Member States.
Finally, the text opens up the prospect of harmonisation of
national legislation on the provision of services five years after
the Directive enters into force.
It was adopted by 391 votes in favour to 213 against, with 34
abstentions.
The revised Directive will now go forward for approval by the
Council of Ministers. If the Council rejects any of Parliament's
amendments or adds any of its own, the text will return to
Parliament for a second reading.
The reactions
Business leaders have expressed disappointment at the
outcome.
“The compromise voted through today delivers only an emasculated
version of a Directive that had promised a single, open European
market for services,” said CBI Deputy Director-General John
Cridland, yesterday. “The likelihood of the European Union
achieving free movement of services – one of its founding
principles – in the near future has now seriously diminished, but
the EU will have to do the best it can.”
Trade union leaders were more sanguine. TUC General Secretary
Brendan Barber said: “While we still have some points to press, the
Parliament's main left wing and right wing groups have voted to
continue the key principle that makes Europe more socially
progressive than the US – that we should balance the economic
benefits of liberalising trade with the protection of people at
work, consumers and the environment.”
The European Commission was simply pleased that the draft
Directive had been approved at all.
“This represents a real advance, a step that no one would have
believed possible just 12 months ago," said Internal Market and
Services Commissioner Charlie McCreevy. "I believe that today’s
vote demonstrates that there is a willingness in Europe to pursue
measures to deliver more jobs and growth.”
